Tag Archives: Irish economy

Death and Taxes

Benjamin Franklin in a letter to Jean-Baptiste Leroy in 1789, stated that

‘In this world nothing can be said to be certain, except death and taxes.”

While not wanting to speak ill of the dead, for the late Brian Lenihan the certainty of death is now is all too apparent, yet because of his calamitous decision to give a blanket guarantee to our banks when the financial crisis came to a head in September 2008, for the rest of us, the certainty of taxes will remain for a very long time indeed. Taxes on our homes, taxes on our wages, taxes on our water, taxes on our fuel, taxes on generations to come, and all as a result of a decision taken in in secret, without consultation or accountability, by a small group of bankers, economists and political leaders.

The recent outpouring of grief and the media love-in over the death of Mr Lenihan concentrated on the man’s personal courage in the face of death, and his affability and generous personal nature.  He was, we were told, a man of the people. Though I did not know him, I am sure that all of this is most likely true. However HSE statistics show that on the same day as Mr Lenihan passed away, close on one hundred people in total died in Ireland. I am sure that much could be said of the personal courage and affability of many of those people also, but they will have died in relative quiet in comparison to the huge coverage afforded to Mr Lenihan, for they were ordinary people, perhaps not as important to society as one such as Mr Lenihan. Nonetheless, history will record that Mr Lenihan, along with a select few politicians, economists, civil servants and bankers, is unique among us as being the only person who signed away our nations future by lumbering us with the debts of reckless and criminal bankers, a future which, had he listened to the advice given at the time by Merrill Lynch a consultancy company whom the Government hired and paid 6 million to for a few days work and who advised him against a blanket guarantee, might have lead us to a much different place today. So while we can mourn the passing of Brian Lenihan the man, we must also face the fact that Brian Lenihan the politician, due to his actions on that fateful September night, played a huge personal part in the destruction of our economy and our society and ensured that whatever about the certainty of death, the certainty of taxes will remain with the rest of us ordinary mortals for generations to come.

For Mr Lenihan at least, these certainty’s  are no longer a worry.

Ronan Gallagher

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THE BUTTERFLY EFFECT

Somewhere in the world a butterfly flaps its wings. This seemingly insignificant action causes a tiny fluctuation in the earth’s atmosphere which sets off a train of events that over a period of time, results in a massive tornado occurring somewhere on the other side of the planet.

‘The Butterfly Effect’ is an elegant explanation of ‘Chaos Theory’ a strange and complex mathematical equation which essentially says that everything on the planet is interconnected and even the smallest fluctuation in the system can have far reaching, unforeseen, and sometimes devastating consequences.

It is a theory that our leaders here in Ireland and in Europe would be wise to take cognisance of as the current path which Irish and European citizens are being forced down by largely unelected and unaccountable mandarins, is of far more significance than a butterfly’s wing flaps, and if the Chaos Theory equation is applied to our economic and political system you can be sure that the resulting hurricane will have hugely devastating and as yet, unforeseen consequences.

One such consequence could be the break up of Europe and a reversion to insular nationalism which could put us right back to Europe pre 1939. Am I being ‘alarmistic’, as an unfortunate former Minister once put it? Should we be stocking up on our iodine tablets? Well, let’s see how such a scenario might play out.

As the debt contagion spreads throughout Europe, more and more of her people are being burdened with the debts of the banks and the bond holders who invested in them. Whatever one’s position is on this, there is absolutely no doubt that these debts were incurred through reckless, negligent, and possibly criminal behaviour by those banks and an abject failure on the part of bond holders, auditors, regulators, Governments, and the ECB to recognise the dangers of ‘bubble economics’ and take action to correct it. Having failed in their duty to the citizens of their countries, and the citizens of the wider Europe, these same leaders guarantee to pay these private bank and bond holder debts and place the burden on the shoulders of their citizens. In an attempt to ensure that these debts are paid and to further certain right wing ideologies, these elite groups inflict austerity measures that bite deep into the pockets of citizens and further contract already shrinking economies resulting in rising unemployment and unsustainable personal debt with devastating social, political, and economic results.

Already we are seeing these ripples of unrest spreading throughout Europe. In Spain a social network revolution not unlike the ‘Arab Spring’ managed to bring thousands into the capital Madrid’s Puerto del Sol square to camp out in protest at Spain’s rising unemployment and growing economic crisis. In Greece there is rising political and social unrest and increased defiance of the imposition by the Greek Government of IMF/EMU austerity measures and the forced sale of strategically important state assets. Portugal has just negotiated its own bail out with austerity measures to follow and Spain and Italy, both on extremely shaky ground, could be next. How will the citizens of these countries react to their loss of sovereignty when unavoidable austerity measures are imposed on them to pay for the debts of the banks, and the failures of their own Governments and European leaders? And what about Germany whose people have been told (wrongly in my opinion) that their taxes are being used to bail out countries such as Ireland, Greece and Portugal? Notwithstanding the fact that German taxes are ultimately being used to bail out German banks who recklessly gambled on Irish banks such as Anglo Irish, a fact which is not being made clear to them, people in Germany cannot be best pleased if they believe that they are being asked to pay for the excesses of others in what now seems like a failed European experiment.

There are those who will say that my above description of what is being done to the citizens of Ireland, Greece, Portugal and what will be done to other European countries whose economies also fail is too simplistic, that it’s too black and white with no allowance for grey areas, but no matter what nuance or spin you put on it, the core effect of what is happening with the IMF/EMU bailout deals is that private commercial debt is being burdened on the shoulders of the citizens of Europe at the same time as we are going through the worst recession since…well, since 1939.

The current recession with its crushing and unsustainable burden of debt, with no growth, no hope, rampant unemployment, economic uncertainty, and the social and political unrest which all that brings with it, is fertile ground for an upsurge in nationalism. The perceived injustices of pouring huge debts on the citizens of Europe to pay for the excesses and failures of others disconnects its citizens from the political system and enhances the growing view that Europe is more interested in serving the interests of big business and less and less in serving the interests of its citizens. This disconnect serves only to foment growing resentment among Europe’s citizens, erode the union’s authority and leadership, and diminish its relevance to its citizens thereby creating a void in European politics. Who knows, perhaps as in the 1930’s, under such circumstances a ‘charismatic’ leader or leaders, swept to power on a nationalist anti European agenda, might rise up from the ashes of an economically ruined Europe to fill that void. The reason given for Europe taking the path it has chosen to take during this economic crisis is to hold the union together; however as the chaos theory equation demonstrates, the possibility of the exact opposite happening is equally as likely.

And we all know where that led to in 1939.

Ronan Gallagher


Taxman

If you drive a car I’ll tax the street,
If you try to sit, I’ll tax your seat,
If you get too cold, I’ll tax the heat,
If you take a walk, I’ll tax your feet.

Should five per cent appear too small,
Be thankful I don’t take it all.
‘Cos I’m the Taxman,
Yeah yeah, I’m the Taxman.

And you’re working for no one but me.

I was reminded of the above Beatles song while listening the other day to Joe Duffy on RTE’s ever popular Liveline in which a cash strapped small business owner told the nation how a 6,000 euro tax arrears bill, through penalties and interest, had quickly notched up to 16,000 in a very short space of time. The Revenue Commissioners it seems, cared little about his financial problems, were pursuing him for the full amount,  and had sent the Sheriff  to collect their money on a number of occasions.

One has to really question the Revenue Commissioners approach to this problem, especially in view of the current financial difficulties caused by the recession and credit crunch. Whilst their primary purpose is to collect taxes due to the state, they also have a responsibility to ensure that in doing so they do not damage the economy further.

Rather than penalising and taking such a heavy handed approach with taxpayers in arrears, why does the Revenue Commissioner not take a NAMA type approach to the problem? They could for instance adopt a policy of gathering the arrears over an agreed and sustainable payment period, as long as current taxes are being paid also. After all, the much put upon taxpayer, trying to survive a recession caused by banks, developers, and Government incompetence, sees their taxes going not to health, education, and other services, but to bolstering the finances of politicians expense accounts, bailing out bankers and developers, and rewarding incompetence and greed with large pensions and golden handshakes. If the Revenue Commissioner adopted a more pragmatic and conciliatory approach to these troubled companies, they could help alleviate the financial difficulties of many small business’s, maintain current tax revenues, and hopefully keep the jobs (and the tax revenues they generate) in these business’s long enough to be able to survive the recession which is crippling them through no fault of their own.

If the Revenue Commissioner does not already see that this makes good sense for our economy, and for our society, then should he/she be collecting our taxes at all?  Or should someone with a more sensible approach take over the role? Someone who realises that being a taxman or taxwoman is not just about collecting revenue, it’s also about ensuring our economy remains healthy and is able to maintain the revenues required to support services.

I can’t see where top heavy penalties, liquidations, business closures, and forcing people on to the dole queues will help that.

‘Cos I’m the Taxman,
Yeah yeah, I’m the Taxman.



Lisbon: Post Coital.

The Lisbon Treaty referendum which we just went through was a bit like sex for Catholics.  We wanted to do it, but was it right? In the heat of the moment, with Lisbon, beautiful Lisbon, spread before us and simmering with seductive promise, we gave in, and in one  lustful moment threw caution to the wind resulting in a Yes! Yes! Yessssss! And now, as we lie, exhausted, sated, and puffing ponderously on  the post coital cigarette, the first tinges of guilt and the prospects of regret begin to creep in.

The tinges of guilt will stem from the fact that perhaps the whole thing was kind of forced, that in our lust we just couldn’t take no for an answer, the prospects of regret perhaps coming from the knowledge that now that we have made our bed, we must lie in it and can only hope we don’t get the wet side.

And if we do get the wet side what then? As the pro Lisbon forces in the country danced ‘the seven veils’ in front of our eyes, tantalising us with the promise of better things to come, they risked raising our excitement and expectation to levels they might not be able to live up to. The promise of jobs, economic stability, and a voice at the center of Europe was at the heart of the Yes campaign’s seductive moves as they strutted their stuff in a sensuous political pole dance which ended with them having their way with us. But as we all know, relationships often change and after the memory of the climax of our yes vote has faded, if those promises are not fulfilled, will we look to our bedfellow with the same dreamy, lust filled eyes? Or, in the cold light of day, will we  begin to see imperfections in our partner? If the result of the seduction does not lead to an improvement in our economy, more jobs, and our voice being heard effectively in Europe, will we become more distant and more critical? Will our lust turn to resentment, anger and ultimately blame? Will we begin to see Europe as a mistake, and, as with all mistakes in relationships, will it eventually lead  to increased pressure for a parting of the ways? And what if the same unfulfilled promise results in similar ‘relationship difficulties’ for other countries who ratified Lisbon, many without being even allowed to vote? What then for this new post coital Europe?

Will we be sitting together around the table come breakfast time or will we prefer to quietly slip out of the bed, sneak down the stairs and scuttle off into the cold, lonely, dark of the night? The outcome of this relationship depends on whether the seed of our seduction bears fruit or falls on barren ground. It is an outcome which now lies firmly in the control of our seducer whose power over us has been greatly enhanced with Lisbon.

Let us hope it is a power and an outcome that lives up to it’s promise.

For all our sakes.


Fab Vinnie, David Lee Roth and Michael O Leary

Back in the early eighties Dave Lee Roth, the spandex wearing ‘wella’ haired front man for 80’s superband Van Halen was being interviewed by Vincent Hanley otherwise known as ‘Fab Vinnie’ for the then hugely popular MT-USA Show on RTE. Vinnie, obviously in awe of the golden haired Roth, couldn’t contain himself and asked him what it was like to be so fabulously wealthy?

With a deft wave of a gold and diamond bejewelled hand, Roth flicked back his hair and looked right at Vinnie with those dreamy eyes and said

‘ You know Vincent, by the time I get to pay my manager, my lawyers, my accountants, my staff, my entertainment bills and the taxman, I’ve just about enough left to buy a small Caribbean island!’

I was reminded of this the other day while watching Michael ‘Arc Angel’ O Leary tell the nation in RTE’s Prime Time debate on Lisbon that we should vote for Lisbon because we are broke, because it is good for business and because he would rather have Europe run Ireland than the ‘Shower of incompetents in Leinster house‘. Michael went on to tell us that he was an important businessman. He employed a thousand people. He paid huge amounts of taxes here in his home country and told the nation that he brought inward investment with his company Ryan Air. Readers should note that it was at that point the memory of Vincent Hanley interviewing Mr Roth nearly a quarter of a century ago popped into my head.

You see, when Michael pays all his taxes etc you can be sure that his take home cheque wont leave him standing at the ATM machine praying to the God of ATM machines to please give him something, anything except that heart sinking message of

‘Sorry you have insufficient funds for this transaction’.

That aside, as long as Mr O Leary pays his fair amount of taxes and covers his costs which I’m sure he does, no matter how much he pays he should not feel that he has any rights or privileges over other tax payers, or that this gives him a right to a bigger say in our democracy than any other citizen of this state, be they taxpayer or welfare recipient.

And there’s where my problem with Europe lies. Deep under my skin I get the creeping feeling that Europe is getting more concerned about markets than people. More concerned about the economic imperative than the  social one. The more I hear ‘We need to be at the heart of Europe winning friends and influencing people‘, I can’t help but wonder if the whole European project amounts to nothing more than a lobbyists paradise? If so why not send a ‘Frank Dunlop’ to Brussels and save all this voting malarkey. Frankly speaking, a word in the right ear from a ‘Frank’ would surely see a jacuzzi in every house in the land. Just imagine it. A Europe with a budget worth billions of euro, covering nearly half a billion people, controlled by a gargantuan political structure where things get done by ‘winning friends and influencing people’ and where the social agenda is being tamed to allow free market conditions to prevail. What’s not to like for  Michael and many like him. It’s a businessman’s paradise!

So every time I hear a well paid business man, politician, economist, banker,  or lawyer tell the nation that they too are sharing the cuts and the pain like everyone else in this seemingly ‘banama’d’ republic, the memory of Mr Roth comes back to me. It rises up when I hear well paid commentators and journalists tell the nation that public sector pay must be cut, education and health cuts must be implemented, that we are all living beyond our means. And it really hits home when one realises that the cuts that the well heeled are taking are more than the average yearly wage of over 80% of the people in this country.

Europe and Ireland. A world of equals? I don’t think so.


Highway Robbery

There are some things that just don’t make sense. Things like taxing ordinary workers, cutting back services, and hitting Health and Education with massive cuts to bail out reckless and possibly criminal bankers in return for nothing more than their toxic debts.

We are told that this must happen in order to protect our international reputation. When we examine this more closely we find that those who we are concerned with impressing are actually the people who helped fuel the crisis in the first place. For example Standard and Poors are now judging our future credit rating unfavourably due to prevailing economic conditions. Fair enough you might say but you might also reasonably ask these people why, if they are such good judges of economic health, they did not foresee the crisis in the first place? Presumably their ability to judge the credit rating and economic outlook for nation states did not just come last week, or did it? Is it possible that these people decided that our borrowings should cost more because they know we need to borrow more to survive the crisis they didn’t see coming? You know how the capitalist mantra goes, the greater the demand, the higher the price. Simply put, make hay while the sun shines.

We are also told that if we don’t implement these harsh economic conditions on our citizens, our country will be taken over by the IMF who will ruthlessly cut services and slash budgets like some maniac Texan with a chainsaw. Perhaps someone could explain how this could happen? Was their an agreement made by any Government, past or present, that effectively borrowed money and put up as collateral the economic independence of this great country? Did I miss a referendum asking me to vote for something like this? This is a bit like waking up one morning to find that your wife, mother, or father, had borrowed a load of money and without your permission had given as collateral the title to your home and now that the money has been wasted, ask you to pay the debt in order to save the family home from takeover by their creditors.

It is a sobering thought that the recent 7 billion of state money pumped into our sick and blighted banks is three times that which the last mini budget tried to claw back from the taxpayer and almost equal to what will be clawed back over the next few budgets. Now I’m no rocket scientist but when you look at it that way you begin to get a sense of what is happening here. The citizens of Ireland and many generations to come, are being forced (not asked) to pay to prop up an unreformed, greed driven banking system and an incompetent, reckless Government which has failed miserably to govern this country in a responsible and prudent manner over the last ten years.

In the murky world where politics and business meet, that unfortunately does make sense.


Where are they now?

Dan McLaughlin. Remember him? Yeah, sure you do! You know, the economist guy with the Bank of Ireland who became one of the cheerleaders of the ‘celtic tiger’. Dan was a great man for figures and abbreviations. A few years back when the party was in full swing all RTE had to do was point a camera at Dan and he would let off a volley of CAPITAL LETTERS, percentages, numbers, and statistics to reassure us all that said party would not be coming to an end any time in the near future. The housing market was sound. The economy was in fantastic shape. Ireland was a world beater! Dan the man!  Dan the Bullish Man!

Funny thing is that if you add a t to Bullish and then move the sh in front of the i you come up with possibly a more suitable and descriptive word for Dan. Go on. You know you want to try it!

Of course Dan the Bullish Man was only doing his job. And a bloody great job he did too. Talking up the property market, talking up the economy, talking up the bank that paid his wages. Sure what else would you expect him to do? Anyone with an ounce of wit would know that right? Anyone that is, apart from the mandarins in RTE who seemed to hang unquestionably on his every word.

One has to wonder at the wisdom of paying too much attention to the bullish outpourings of someone who clearly had  a vested interest in talking up the economy. Nonetheless, Dan had his day. Bullishly telling us from TV screens, print and internet media, how wonderful life was. Always dapper, always well versed, Dan oozed positivity and confidence so that we all could feel good about ourselves as we spent our way to nirvana.

Then, one day, without warning or fanfare, Dan the Bullish Man, disappeared. Disappeared before our very eyes he did, and since that day not a trace of him has been found. RTE in particular seem to have great difficulty in finding him. Apparently a huge search was conducted within the RTE campus for him. Every basement, disused studio, props department, and costume cupboard  was thoroughly searched but they found no sign of the man. Many RTE staff and personnel were asked to check the outhouses and sheds of their houses in the hope he might have followed them home, but alas, nothing. Some say he has taken himself to the desert to live the life of a hermit in an attempt to reshape his vision of the world. Others claim to have seen him in many places around the world, yet none can pin him to one location.

It seems that Dan the Bullish Man has completely slipped off the radar of the Irish psyche and having blazed a trail during the boom years, has finally been put out to grass.

I wonder why?


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